Revenue-sharing healthcare joint venture was not a taxable service where parties split functions, costs and responsibilities by contract.

Revenue-sharing arrangements for installing and operating medical equipment and imaging facilities were treated as a genuine joint venture on a principal-to-principal basis, not as a taxable service. The parties divided functions and responsibilities by contract: one side funded, installed, maintained and in some cases operated the facilities, while the hospitals or institution supplied premises, permissions and support, and patient receipts were shared in agreed ratios. The Tribunal noted that revenue sharing alone does not create service tax liability, and the absence of joint loss sharing or separate accounts was not decisive. On that structure, no service was rendered by the operator to the hospitals or institution, and no service tax was payable on the retained amounts.

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Issues: Whether the activity of installing and operating medical equipment and imaging facilities under revenue-sharing arrangements with hospitals and a medical institution constituted a taxable service, or was a joint venture / principal-to-principal arrangement not exigible to service tax.

Analysis: The arrangements showed that the parties jointly undertook healthcare delivery with divided responsibilities: the appellant funded, installed, maintained and in one case operated the facilities, while the hospitals or institution provided premises, statutory permissions, operating personnel or related support, and the receipts from patients were shared as per pre-agreed ratios. The Tribunal noted that revenue-sharing by itself did not create a taxable service between the contracting parties, and that absence of joint sharing of losses or separate accounts was not decisive. Relying on the contractual structure and earlier Tribunal decisions, it held that the activities were undertaken as a joint venture on a principal-to-principal basis, with healthcare services ultimately provided to patients and no service rendered by the appellant to the hospitals or institution.

Conclusion: The arrangement was not a taxable service and no service tax was payable on the amounts retained by the appellant.

Ratio Decidendi: Where parties collaborate under a genuine revenue-sharing joint venture to provide healthcare services to patients, the receipt retained by one party is not consideration for a taxable service to the other party merely because the parties allocate functions, costs and operational responsibilities by contract.

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